The United States and Japan will step up their defence cooperation to deal with the threat from nuclear-armed North Korea as tensions in East Asia remain high, officials from the two allies said on Thursday.

Vic transit plan world class: industry

Public transport in Melbourne will be transformed into a world-class system on par with London and New York under a Victorian government plan, industry groups say.

Business and infrastructure bodies have praised the coalition's rail and road-heavy budget that pledges to build a $11 billion rail link and $10 billion for the western section of the East West Link.

The pipeline of road and rail projects will not only reduce congestion and improve efficiency for business, but it will directly create jobs, they say.

Infrastructure Partnerships Australia (IPA) chief executive Brendan Lyon said as Melbourne's population grows it is important the government gets the right projects in place to begin re-engineering the city for growth.

"The Metro rail tunnel allows Melbourne to evolve its suburban railway toward a world-class, turn up and go, mass transit system, like those underpinning major world cities, like New York, London and Shanghai," Mr Lyon said.

The road and rail projects outlined in the budget connect all points of Melbourne's compass, he said.

Victorian Employers' Chamber of Commerce and Industry (VECCI) chief executive Mark Stone said the budget will support the state economy to grow.

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"It is a budget that will build on Victoria's relatively strong financial position, progress important infrastructure projects and provide tax relief for business," Mr Stone said.

The construction industry will also receive a boost off the back of the budget, Australian Industry Group director Tim Piper said.

The combination of road and rail funding and $1.2 billion for vocational training will ensure Victoria has the skill base it needs to complete the projects, Mr Piper said.

"Not only will projects like the $11 billion Melbourne Rail Link and ongoing road investments ease congestion and reduce the cost of doing business in Victoria, but they will provide job opportunities for our state and lead to urban reinvigoration," Mr Piper said.